IBM’s quarterly results failed to impress investors used to a stellar showing from Big Blue, adding to concerns about lackluster corporate information technology (IT) spending and dragging its stock down more than 3 percent.
The company’s earnings beat forecasts and it increased its earnings per share outlook for this year, but it faced a high hurdle after recent strong reports from Oracle and Accenture and analysts focused on slower expansion in key regions and businesses.
Further stoking worries about IT spending, business software maker VMware Inc posted quarterly profit above expectations, but warned of uncertainty among some of its corporate customers in Europe.
“We have seen a bit more scrutiny and higher levels of approval required, particularly with larger deals where they would go for CFO [chief financial officer] and CEO approval, where in the past we may not have seen those approvals to be necessary,” VMWare chief financial officer Mark Peeking said.
IBM, an IT hardware bellwether with a global clientele, said total services signings — an indicator of future growth — climbed to US$12.3 billion in the third quarter, in line with expectations.
Revenue rose 8 percent to US$26.16 billion, marginally softer than the average forecast of US$26.26 billion.
US economic concerns and a worsening European financial crisis have hurt consumer demand. Companies such as IBM that sell hardware and software for data centers powering the Internet have remained resilient.
IBM said revenue from cloud computing in the first nine months of this year was twice as much as the whole of last year.
Adjusted for currency, IBM’s revenue from the Americas rose 6 percent in the quarter, with Europe, Africa and the Middle East flat, and Asia up 1 percent.
IBM also derives a major portion of its revenue from government spending and the financial services industry — both hit hard by widening fiscal deficits and crumbling markets respectively.
On Monday, the company raised its full-year diluted earnings forecast to at least US$13.35 per share, from its prior estimate of at least US$13.25. Analysts had expected US$13.32, according to Thomson Reuters I/B/E/S.
IBM reported a third-quarter profit, excluding items, of US$3.28 per share, up 15 percent year on year and above expectations of US$3.22.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
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